The special committee of a publicly traded company’s board of directors sought Stout's expertise with respect to acquisitions of businesses from related parties. Stout's client, through its operating subsidiary, is a retail energy provider in deregulated markets in the United States and considers growth through acquisitions of retail electric and gas customers and businesses a key part of its value proposition. The special committee engaged Stout to provide fairness opinions in connection with two such acquisitions.
We performed analyses to quantify the range of consideration paid in the acquisition compared with the potential value received from the acquisition targets. The most recent transaction involved consideration of a large block of shares as well as significant contingent consideration. Our analyses included a discounted cash flow approach and an evaluation of the trading multiples of comparable public companies. In addition, Stout conducted an accretion-dilution analysis to assess the impact the transaction was expected to have on projected earnings and distributable cash flows.
Our analyses and engagement provided independent, experienced perspective to support our client’s decisions related to these transactions. The market responded favorably on both occasions, with our client’s stock price increasing following the announcement of each acquisition, as well as other favorable data.